In a significant move that indicates a shift towards embracing hybrid work, Atlassian, a leading provider of team collaboration software, recently announced the acquisition of video messaging startup Loom for a whopping $975 million1. This acquisition represents Atlassian’s largest deal to date2.
Loom’s Journey and Valuation
Loom, a San Francisco-based startup, was once dubbed a unicorn, a term used in the venture capital industry to indicate a privately held startup company valued at over $1 billion. The company had raised $205 million in funding over several rounds3.
The journey began with a seed round of $3.75 million, followed by a Series A funding round led by Kleiner Perkins that garnered $11 million in late 2018. Subsequently, in November 2019, Loom secured $30 million in Series B funding, led by Sequoia Ventures, which valued the company at $350 million.
However, the most significant leap came in May 2021 when Loom raised a Series C round of $150 million, led by Andreessen Horowitz. This funding round catapulted the startup to unicorn status, with a valuation of $1.53 billion4. An extension of the Series B round also added another $23 million to their funding pool.
Despite these impressive numbers, the acquisition by Atlassian represents a significant discount on Loom’s valuation during its last funding round5.
Implications of Loom’s Acquisition
While this acquisition might seem like a setback for the investors who participated in the Series C funding round, it is a strategic win for Atlassian.
By adding Loom to its portfolio, Atlassian is making a bet on the future of hybrid work2. As more organizations adopt flexible work arrangements, the demand for efficient, user-friendly collaboration tools is on the rise. Loom’s video messaging service can potentially enhance Atlassian’s existing suite of products by providing a more personal and engaging way for teams to communicate.
For product managers, like myself, who use both Jira (Atlassian’s project management tool) and Loom, the acquisition brings exciting prospects. The integration of Loom’s video messaging capabilities into Jira could significantly improve team collaboration and productivity.
A Look Back on Loom: What If?
It’s interesting to speculate on what might have happened if Loom had accepted Atlassian’s offer in 2021 instead of raising the Series C funding at a unicorn valuation. Given the rapid evolution of the tech landscape and the unpredictable nature of startup success, it’s challenging to predict whether the outcome would have been any different.
However, it’s worth noting that Loom’s decision to raise additional funding likely provided them with the resources needed to further develop their product and grow their user base. This growth, in turn, may have made them a more attractive acquisition target for Atlassian.
Conclusion
In conclusion, Atlassian’s acquisition of Loom represents a strategic move in embracing the future of hybrid work. While Loom’s investors might not have achieved the return they hoped for, the deal opens up new possibilities for enhancing team collaboration and productivity through the integration of video messaging services into Atlassian’s suite of products.
